City, Dominion reach 1-year tax deal Power

plant will pay $250,000 more

By Chris Cassidy , Staff writer

Salem News

December 15, 2007

SALEM - An eleventh-hour tax deal was struck yesterday between the city and its largest taxpayer, Dominion, the owner of the Salem Harbor Station power plant.

The one-year agreement gives the city an additional $250,000 in tax revenue and buys both sides more time to iron out a longer-term tax deal.

Dominion will pay $4.75 million in taxes next year - its highest payment since fiscal 2003. For the last four years, the power plant has paid $4.5 million, making it the city's largest revenue source.

The agreement was finalized yesterday afternoon, just three days before the City Council meets to set the tax rate.

"Every dollar from the power plant definitely has an impact on what the homeowner pays, so any time we can get an increase, that's good news," Mayor Kim Driscoll said. "The additional money is a big plus, but also the stability of having the funding in place for this year was critical to help us set the tax rate and help us settle collective bargaining agreements."

Earlier this week, the city announced it had reached a tentative agreement with the teachers union and a definitive deal with about 90 public works employees, city office workers and inspectors.

Facing a $1.8 million school budget gap that will likely grow, the city needed some good financial news.

"I think we have a good relationship with the city of Salem and local government there," Dominion spokesman Dan Genest said. "They were in financial stress, and we were happy to sign this deal and help them work out those issues."

Negotiations were put on hold after last month's steam-pipe rupture that killed three power plant employees. The plant has been shut down since the accident and not generating electricity - or money.

Soon, both sides will return to the bargaining table to negotiate a long-term deal, and the stakes are high. Several proposed environmental regulations are likely to force Dominion to assess the future viability of the plant as it adds up the cost of upgrading the coal-powered plant to meet the new standards.

The one-year agreement gives both sides breathing room as the exact details of the new regulations become clearer.

It's also the end of a process that began in the spring.

"They delivered, and I think they should be commended for it," Driscoll said of Dominion. "We had a tough negotiation, but at the end of the day it's another $250,000 in city coffers due to their efforts."

Staff writer Chris Cassidy can be reached at 978-338-2526 or by e-mail at ccassidy@ecnnews.com.

The power plant's tax bill


Fiscal year and Amount in millions

1998    $8.7
1999    $8.7
2000    $8.7
2001    $8.7
2002    $7.7
2003    $6.7
2004    $4.5
2005    $4.5
2006    $4.5
2007    $4.5
2008    $4.75

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